CIL, the world's biggest producer of the commodity, has put
on hold a plan to import as much as 250 million metric tons of the fuel over a
decade, three people with knowledge of the matter said.
The company scrapped a proposal to buy 4 million tons of coal
this year and suspended a separate plan to import about 20 million tons
annually over a decade as it could not agree with customers on delivering the
fuel to plants.
Customers, including utilities, want coal to be delivered at
their plants, while the mining company offered to unload shipments at ports, people
said. Coal India typically sells its domestic output to customers at
the mines and doesn't engage in inland transportation, they said.
“Inland movement of coal has been a big issue that needs to
be sorted out or it will hurt power production and in turn, economic growth,” said Alex Mathews, head of research at Kochi, India-based Geojit BNP Paribas
Financial Services.
“Many power producers have kept their capacity addition
plans on hold because of coal shortages and Coal India's decision is another
sign that the problem is becoming bigger.”
India's coal production has trailed demand from utilities,
and cement makers because of delays in land acquisition and environmental
approvals. Output in the year ending March 31 is expected to reach 559 million
tons, falling short of demand by 137 million tons, Coal Minister Sriprakash
Jaiswal said in September. Supplies from countries such as Australia, Indonesia and South
Africa may be needed to meet the gap.
Power-station coal prices at Australia's
Newcastle port, an Asian benchmark, rose 3.6 percent in the week ended Jan. 27
to $118.80 a ton from $114.65 the previous week, according to IHS McCloskey
data on Bloomberg.
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